With emerging markets in free-fall because of concerns that the US central bank is about to start reducing the ­supply of global liquidity, investors are keeping a close eye on China, where the trial of
Bo Xilai
is shaping up as the most important political trial in decades.

Bo was a former rising star of the Chinese Communist Party whose arrest last year sent shock waves through the country’s political establishment. But his high-profile public trial – seen as the most important in China since 1981 when Madame Mao and the Gang of Four were tried for their role in the disastrous Cultural Revolution – comes at a difficult time. In recent weeks, investors have increasingly turned against the former emerging market darlings known as the BRICS (Brazil, Russia, India, China and South Africa).

Although figures released last week showed that China’s huge manufacturing sector hit a four-month high in August, investors remain concerned the country is likely to stumble as it tries to rebalance its economy away from a growth based on investment and exports, to a more balanced approach where domestic consumption plays a bigger role. In addition, they’re worried that the Bo trial could fuel growing political dissent.

Damage control

Most political analysts believe that Chinese political leaders are already in damage control, trying to limit the likely fallout from charging a senior Chinese official with corruption and abuse of power. They believe that the various factions within China’s powerful Communist Party have already reached an agreement on Bo’s verdict and sentence, which will likely see the former high-flying official receiving a 15-year prison sentence.

Related Quotes

Company Profile

But Chinese officials remain concerned a guilty verdict could trigger a major political backlash from Bo’s supporters.

As a result, they’ve gone to huge lengths to try to demonstrate that his trial is open and fair. In an unusual step the Intermediary People’s Court in the eastern Chinese city of Jinan, where Bo is on trial, is publishing transcripts of the trial on its microblog, and nearly two hundred pages of trial transcripts are now also available on Chinese news sites.

What’s more, Bo has been given an opportunity to defend himself against the allegations levelled against him and to question the credibility of key witnesses, including his wife, Gu Kailai, whose murder of British businessman Neil Heywood started a chain of events that led to Bo’s own detention in March last year. As Chinese political observers note, this is not how Chinese justice typically operates.

All the same, Chinese officials are very conscious that Bo’s trial inevitably raises a fraught political issue: how the families of top Chinese officials, who supposedly earn tiny official salaries, are nevertheless able to accumulate massive fortunes. This has been a sore point for senior Chinese officials after The New York Times reported that the family of former prime minister
Wen Jiabao
had amassed a $US2.7 billion ($2.99 billion) fortune, and Bloomberg reported that the extended family of Chinese president
Xi Jinping
controls a fortune worth hundreds of millions of dollars.

Growing dissent

Many political observers believe that it appears that in order to limit the political fallout, Chinese officials have likely struck a deal with Bo. He’ll be allowed to defend himself and to keep his considerable fortune. But in exchange he’s promised not to make allegations against other senior Chinese officials or to expose the party’s inner workings.

But although Chinese officials have worked hard to stage-manage Bo’s trial, analysts warn they are struggling to contain the growing tide of dissent that the trial has triggered, particularly among lawyers and intellectuals. And they worry that this dissent could undermine the Communist Party’s grip on power.

Reformers’ hopes were boosted last December when Chinese president Xi Jinping paid lip-service to civil rights, saying that “no organisation or individual has the privilege to overstep the Constitution and the law".

Since then, members of China’s New Citizens’ Movement have become more outspoken, calling for more civil rights and greater disclosure of the massive wealth accumulated by senior party officials.

But their growing opposition has met with a ruthless repression: dozens of them have been arrested and charged with subversion, including the movement’s founder, high-profile ­Beijing lawyer Xu Zhiyong.

Analysts argue that the tough crackdown signals that Chinese political tensions are rising and warn that the country faces increasing political instability as a newly empowered middle class insists on greater accountability from ­politicians.